Japan to cut LNG imports from RI

Japan to cut LNG imports from RI

TOKYO (Dow Jones): Tohoku Electric Power Co. and Tokyo Electric Power Co. (Tepco) will cut imports of Indonesian liquefied natural gas (LNG) by 2.5 million metric tons to about a combined one million tons a year, after the current contract expires in December 2004, sources at the firms said Wednesday, The Nihon Keizai Shimbun reported in its Thursday morning edition.

Indonesia is Japan's largest source of LNG.

The utilities believe large-volume imports under a long-term contract would carry risks amid intensifying competition and slow growth in electricity demand. Production capacity at the Sumatra gas field is also falling.

Tohoku Electric will reduce imports to around 850,000 tons from three million tons, while Tepco will cut them to some 150,000 tons from 500,000 tons.

The new contract the firms are expected to sign with Pertamina, the state-owned oil/gas company, in April will be shortened to between five and 10 years from the current 21.

Since 1984, the utilities have jointly imported LNG from northern Sumatra for use at thermal power stations.

Tohoku Electric has contracts with three countries to import four million tons of LNG a year, while Tepco's annual imports total 16 million tons from seven countries.

The Sumatra field is Tohoku Electric's largest source of LNG. The utility is expected to start importing LNG from other sites in Indonesia and other Asian countries.